Principal of the loan = $ 2,000
Interest rate = 8% annually or 0.08
Period of the loan = 6 months or 1/2 year
For calculating the interest that Margo will pay, we use the simple interest formula, this way:
Interest = Principal * interest rate * period of the loan
Replacing with the values we know:
Interest = 2,000 * 0.08 * 0.5
Interest = $ 80
Interpretation
Margo will pay $ 80 of interest for the loan after 6 months
